Deutsche and Beckkett both claim laurels in Adaro saga

There is a chance that the seven-year dispute between Beckkett and Deutsche Bank over the sale of PT Adaro shares, which were held by the bank as collateral for a loan, has come closer to resolution. On Monday, the Singapore Court of Appeal published its judgment on appeals made by both sides on rulings handed out by the country's High Court in September 2007.

The Court of Appeal reaffirmed the lower court's decision that neither Deutsche nor any third parties conspired in 2001 to sell shares in Adaro, Indonesia's second biggest coal miner, for less than they were worth; but said the German lender had breached its duty for failing to take proper steps to sell those shares at the best possible price.

But, it also ruled for Deutsche's counter-claim against Beckkett for $86 million in outstanding principal and interest owed on a defaulted loan, although it stayed the payment pending an assessment on any damages due to Beckkett. That decision will be made by Singapore's Registrar, possibly within six months, after listening to each party's assessment of the correct valuation of those Adaro shares as of 2001.

Deutsche held a 40% stake in Adaro as collateral for a $100 million bridging-loan extended in 1997 to PT Asminco Bara Utama, a company linked to Sukanto Tanoto, one of Indonesia's richest men. Asminco defaulted on the loan a year later at the height of the Asian financial crisis. Deutsche subsequently sold the shares to PT Dianlia Setyamukti, a company controlled by the Soeryadjaya family, for $46 million in 2001, after repeated standstill agreements and failures to negotiate a restructuring of the loan.

But Beckkett, the Singapore-based entity that owned Asminco and is controlled by Tanoto, has repeatedly alleged that Deutsche conspired with Dianlia and others to sell the Adaro shares at less than market value. The Soeryadjaya family, which is also among Indonesia's wealthiest families, later sold some of the shares in a leveraged deal to a group of international investors, including the Government of Singapore Investment Corp (GIC) and Goldman Sachs.

Confirmation that Deutsche acted lawfully when it sold the shares to Dianlia suggests that any further attempts by Beckkett to recover its 40% stake in Adaro would seem futile. In the court's words, the sale "was not improper nor effected pursuant to a conspiracy between them [Deutsche and Dianlia], whether by lawful or unlawful means".

So, clearly it's now a numbers game and, sensibly, all parties will prepare their 2001 valuations for the Adaro shares and be ready to present them to the Registrar for its deliberation in a few months' time.